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Poverty, Inequality, and the Local Natural Resource Curse

Author

Listed:
  • Loayza, Norman

    () (World Bank)

  • Mier y Teran, Alfredo

    () (University of California, Los Angeles)

  • Rigolini, Jamele

    () (World Bank)

Abstract

The extent to which local communities benefit from commodity booms has been subject to wide but inconclusive investigations. This paper draws from a new district-level database to investigate the local impact on socioeconomic outcomes of mining activity in Peru, which grew almost twentyfold in the last two decades. We find evidence that producing districts have better average living standards than otherwise similar districts: larger household consumption, lower poverty rate, and higher literacy. However, the positive impacts from mining decrease significantly with administrative and geographic distance from the mine, while district-level consumption inequality increases in all districts belonging to a producing province. The inequalizing impact of mining activity, both across and within districts, may explain part of the current social discontent with mining activities in the country, even despite its enormous revenues.

Suggested Citation

  • Loayza, Norman & Mier y Teran, Alfredo & Rigolini, Jamele, 2013. "Poverty, Inequality, and the Local Natural Resource Curse," IZA Discussion Papers 7226, Institute for the Study of Labor (IZA).
  • Handle: RePEc:iza:izadps:dp7226
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    References listed on IDEAS

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    1. Fernando M. Arag?n & Juan Pablo Rud, 2013. "Natural Resources and Local Communities: Evidence from a Peruvian Gold Mine," American Economic Journal: Economic Policy, American Economic Association, pages 1-25.
    2. Stephan Litschig, 2008. "Financing local development: Quasi-experimental evidence from municipalities in Brazil, 1980-1991," Economics Working Papers 1142, Department of Economics and Business, Universitat Pompeu Fabra, revised Jun 2012.
    3. Fernanda Brollo & Tommaso Nannicini & Roberto Perotti & Guido Tabellini, 2013. "The Political Resource Curse," American Economic Review, American Economic Association, pages 1759-1796.
    4. Frederick van der Ploeg, 2011. "Natural Resources: Curse or Blessing?," Journal of Economic Literature, American Economic Association, pages 366-420.
    5. Oeindrila Dube & Juan F. Vargas, 2013. "Commodity Price Shocks and Civil Conflict: Evidence from Colombia," Review of Economic Studies, Oxford University Press, vol. 80(4), pages 1384-1421.
    6. Paul Collier & Benedikt Goderis, 2007. "Commodity Prices, Growth, and the Natural Resource Curse: Reconciling a Conundrum," CSAE Working Paper Series 2007-15, Centre for the Study of African Economies, University of Oxford.
    7. Guy Michaels, 2011. "The Long Term Consequences of Resource‐Based Specialisation," Economic Journal, Royal Economic Society, vol. 121(551), pages 31-57, March.
    8. Norman V. Loayza & Jamele Rigolini & Oscar Calvo-González, 2014. "More Than You Can Handle: Decentralization and Spending Ability of Peruvian Municipalities," Economics and Politics, Wiley Blackwell, pages 56-78.
    9. Leonith Hinojosa, 2011. "Riqueza Mineral Y Pobreza En Los Andes," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 23(3), pages 488-504, July.
    10. Francesco Caselli & Guy Michaels, 2013. "Do Oil Windfalls Improve Living Standards? Evidence from Brazil," American Economic Journal: Applied Economics, American Economic Association, vol. 5(1), pages 208-238, January.
    11. Raddatz, Claudio, 2007. "Are external shocks responsible for the instability of output in low-income countries?," Journal of Development Economics, Elsevier, pages 155-187.
    12. World Bank & Inter-American Development Bank, 2003. "Restoring Fiscal Discipline for Poverty Reduction in Peru : A Public Expenditure Review," World Bank Publications, The World Bank, number 15118.
    13. Javier Arellano-Yanguas, 2011. "Aggravating the Resource Curse: Decentralisation, Mining and Conflict in Peru," Journal of Development Studies, Taylor & Francis Journals, vol. 47(4), pages 617-638.
    14. Sachs, Jeffrey D. & Warner, Andrew M., 2001. "The curse of natural resources," European Economic Review, Elsevier, vol. 45(4-6), pages 827-838, May.
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    Cited by:

    1. Badeeb, Ramez Abubakr & Lean, Hooi Hooi & Clark, Jeremy, 2017. "The evolution of the natural resource curse thesis: A critical literature survey," Resources Policy, Elsevier, vol. 51(C), pages 123-134.
    2. Gadom DJAL-GADOM & Armand MBOUTCHOUANG KOUNTCHOU, 2016. "Cross-County Poverty Comparisons In Chad: The Impact Of The Oil Revenues Redistribution Policy," Region et Developpement, Region et Developpement, LEAD, Universite du Sud - Toulon Var, vol. 44, pages 61-78.
    3. Sanoh,Aly & Coulibaly,Massaoly, 2015. "Socioeconomic and fiscal impact of large-scale gold mining in Mali," Policy Research Working Paper Series 7467, The World Bank.
    4. Gadom Djal Gadom & Armand Mboutchouang Kountchou & Gbetoton Nad ge Ad le Djossou & Gilles Quentin Kane & Abdelkrim Araar, 2017. "The impact of oil exploitation on wellbeing in Chad," Working Papers PMMA 2017-06, PEP-PMMA.

    More about this item

    Keywords

    natural resource curse; poverty; inequality; living standards;

    JEL classification:

    • D7 - Microeconomics - - Analysis of Collective Decision-Making
    • H7 - Public Economics - - State and Local Government; Intergovernmental Relations
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • Q3 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation

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